The Devastating Effects of Cyberattacks on Business

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Can a cyber attack put your small business out of business? Possibly. Will it cost your company dearly? Most definitely. We examine the devastating effects of cyberattacks.

Many business leaders think that a cyber attack will never happen to them because their businesses are too small to be noticed by cybercriminals. However, this is a dangerous misconception that can get a business into trouble. The number of cyberattacks targeting businesses with fewer than 250 employees has been steadily increasing over the last five years. In 2015, 43 percent of all reported cyberattacks were against small businesses, according to Symantec’s “2016 Internet Security Threat Report”.

The effects of a cyber attack can be devastating to a small business’s bottom line and maybe even to its very existence.

The High Costs of Cyberattacks

In a 2015 study of more than 5,500 companies in 26 countries around the world, Kaspersky
Lab and B2B International
 found that a single cyber attack costs small and mid-sized businesses an average of $54,653. This figure includes:

  • The costs associated with downtime (an average of $23,000)
  • The money spent on bringing in external help (e.g., IT security consultants, lawyers) to deal with the aftermath of the cyber attack ($10,000 on average)
  • The money spent on public relations efforts to manage communications with customers and the public as well as the money spent on marketing activities designed to reduce the cyber attack’s impact on the business’s reputation ($8,653 on average)
  • The expenses incurred from upgrading the IT infrastructure, hiring more staff, and other measures taken to prevent future cyberattacks (an average of $8,000)
  • The costs associated with lost business opportunities (an average of $5,000)

The $54,653 figure does not include hidden costs and effects that are hard to monetarily quantify. According to the Deloitte  Advisory’s 2016 report “Beneath the surface of a cyber attack: A deeper look at business impacts”, they include:

  • Higher insurance premiums
  • Higher interest rate for borrowed capital if the business’s credit rating falls
  • Devaluation of the business’s name or logo
  • Loss of competitive advantage if intellectual property was stolen during the cyber attack

While you might not incur all of these hidden and non-hidden costs if your business is attacked, those that you do encounter will deal your company a significant financial blow.

Paying the Ultimate Price

The high costs of a cyber attack might result in a business paying the ultimate price: going out of business. According to the U.S. National Cyber Security Alliance, 60 percent of small companies experiencing a cyber attack go out of business within six months. This alarming statistic is from 2011,
though, and no recent studies have been conducted to confirm it. Nevertheless, the threat is still real. Just ask the former employees of  Code Spaces.

Code Spaces was a small company that offered source code management tools. In 2014, a hacker took over part of its IT infrastructure in an attempt to extort money from the company. When Code Spaces refused to give into the demands, the hacker deleted most of the company’s data and its backups. Code Spaces went out of business as a result.

Prepare Now So You Do Not Have to Pay Later

No matter whether your business is large or small, you need to do everything that you can to protect it against cyberattacks. You probably already take some measures, such as using firewalls and anti-malware software. However, your IT service provider can conduct a security analysis and recommend additional ways to secure your business.

Find out how we can help with your IT challenges.
Talk to us today 1300 478 738 or Email

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About the author:

Ash Klemm

Ash Klemm

Ash has over 20 years of experience in sales and marketing. His journey from a casual salesperson at Chandlers to State Manager at a national IT distribution company, while battling health issues, including a double lung transplant in 2015, gave him the experience, know-how, tenacity, and marketing insight, to find solutions and help businesses grow. After spending several years in the ivory tower of state management, Ash missed the genuine connection of face to face meetings and helping make a difference to businesses in need. His authentic, conversational, and easy-going nature helps our customers feel at ease and shows them we are a brand to trust. Ash spends his days advocating for our customers to ensure they receive the best possible service in a timely fashion. Ash is also the in house chair builder. His curiosity and natural problem-solving ability make him the perfect first call for all our new customers to help determine what is wrong, how Surety IT can help and what the best solutions are moving forward.
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